tv Bloomberg Technology Bloomberg October 17, 2017 5:00pm-6:00pm EDT
democrat patty murray drafted the agreement. trump signed an executive order order blocking those payments just last week. the third time was not the charm for president trump's travel ban. a federal judge in hawaii has blocked the ban on grounds is still reflects anti-muslim hostility. earlier tries were rejected for the same reason. it could head back to the supreme court. negotiations over the future of nafta were extended into the first quarter of 2018 after canada and mexico rejected what they see as hard-line u.s. proposals. a fourth round of talks wrapped up in washington. nations are trying to find common ground on procurement. president trump will announce his fed chair nominee soon, maybe even before leaving for an early november trip to asia. the president is said to be working with a list of five names, including current chair, janet yellen, whose term ends in
february. the post requires confirmation by the u.s. senate, and that takes months. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am alisa parenti. this is bloomberg. ♪ emily: i am emily chang and this is "bloomberg technology." its 22nd quarter of declining revenue. but there are great spots in the picture. the breakdown today's earnings report. the inside track on travis kalanick's future and uber's dump the year. my exclusive interview with arianna huffington here at the tech conference in laguna beach, california.
vte double down in the race to launch america's first smartphone-tablet buy in. we discuss strategy and the technology behind the multiple smartphones. strong earnings report. ibm sales beat estimates, sending shares higher in u.s. trading. the tech giant's positive results lifted by growth from software projects -- products. joining us, forrester vice president, andrew bartel's. the 22nd quarter of revenue decline in a row, when can ibm take this cycle? getting close to turning the quarter. i would say sometime in 2018 is when it is likely to grow revenue again. 45% of its revenues are coming through strategic initiatives. that is about 10%. if they can push that ted 12%,
15% growth, that will move it toward growing revenue again. emily: what sectors you expect that growth to come from? is it the cloud? cloud revenue was up 20%, year over year. andrew: it will come primarily from a software, ibm's most profitable sector. its analytics were only up 5%. its big growth came in security, up 50%. ibm does not do simple, ibm does complex. it is a slow cycle of getting companies to buy complex solutions. i think it is turning the quarter in getting enough clients willing to engage in complex solutions. we will see that software growth plus services growth kick over the positive territory sometime in 2018. ibm had a bit of a halo effect, due to buffett's
endorsement. but berkshire hathaway is no longer the largest shareholder in ibm. how does that affect the company ? does supply at positive glow. i am not sure how that will play with investors. patient, but tired. they are not looking at what investors are doing, but what is the company going to do during that revenue growth? i think it is getting close, but not quite there yet. emily: watson and blockchain are two that's ibm is making on the future. when will these bets pay off and how big will they be? take a while.ill blockchain in particular, maybe four or five years to gain traction. benefits.some niche watson is more of a halo to wrap around a lot of things. watson has a lot of complexity to it, and it is hard to
implement in the large categories. it looks best with large companies willing to take the time to help watson get trained, to tackle the complex problems they have. i do not know if watson will be the key generator of revenue growth. it will be a core factor. a lot of the ai technology will be sold as middleware. that will be the secret for ibm, how to turn watson technologies into technologies other companies use? ibmy: bloomberg estimates will kick that growth until 2019. what you want to see ibm do between now and then? andrew: the key thing is to keep focusing on software. cloud is a part of it. behind amazoning
and microsoft and google in terms of revenue growth. 20% is not that impressive compared to them. it needs to stick with what it knows best, how to get these large organizations and large clients to get deeper into ibm, to use it more aggressively, and solve more complex problems? it is the slow sales path it will take to get this off. but i think it is getting close those clients willing to make the big commitment, those $1 million deals with ibm, which will turn a corner into revenue growth. 2019 is realistic, certainly by then. president,ester vice andrew bartel's. thank you for weighing in. the head of facebook's secretive lab is leading a new project. said, the timing feels right to step away and be
purposeful about what is happening, new ways to contribute in times of disruption. they were at the company for eight months, pushing video chat devices. she said she will work with companies leadership over the next few months to ensure a smooth transition. coming up, we will speak to an apple analyst to upgraded the stock after downgrading the company in june. we will ask what changed for the iphone maker. and we're live streaming on twitter. check us out weekdays. this is bloomberg. ♪
emily: anticipation for the iphone x is building to a fever pitch. the $1000 price tag may seem steep to some, but andy hargreaves upgraded apple's stock because that price point will bring in more profits or customer. he joins us from portland to explain. why reverse your earlier decision? andy: our previous call was based on unit concerns. we just came to the conclusion as you pointed out, the higher price, the change to the structure of pricing for storage, would drive gross profit per user higher, and that would effectively outweigh the unit concerns we had. talk to us about the greater pricing power you see
when it comes to the iphone x. has only been an element of elasticity in the iphone user base, contrary to most consumer electronics markets, the prices have gone up consistently over the past decade, but it has been a slow, steady march. this year, price raise, a significant one, with the iphone x. but moderate increases for them 8 and 8 plus. we will extract the maximum growth profit from each segment. emily: what about downside risks? are you factoring in this latest move by qualcomm to prevent sales of the iphone in all of china? andy: yeah. the qualcomm legal risk is the tail risk to us, meaning, the odds are quite low they will be successful in getting injunctions in the single market.
it is not something we take into huge account. i think the risks we are more conscious of, the risk of units disappointing and hitting an elasticity point we have not seen yet. emily: are you would all concerned about news we have been hearing, supply chain issues and delays of the iphone x itself? it is something we are highly conscious of and paying close attention to. supply, to us, is a transitory issue. the demand for iphones usually does not go anywhere. buyuse iphone buyers by -- iphones, not androids. issues manifest into higher cost, that could be a bigger issue. but we have not seen that yet. emily: beyond the iphone x, what segment of apple's business are you most optimistic about?
is it services? what will make up the rest of the growth? andy: just being fair, the iphone drives the majority of profits. -- of profits. it is a 1a and 1b of what we focus on. we focus on the app store. to us, it is the best services line item. it is still something that creates a lot of value. -- i thinkthe watch the watch is regaining potential. emily: andy hargreaves from keybanc, thank you for joining us. ariannerd member huffington gives us insights into how its new ceo is holding up. this is bloomberg. ♪
take a listen. arianna: he is on the board and is very active. he built uber to the juggernaut it is now. he passed the baton onto dara. he introduced dara as a ceo. it was a very nice transition of power and that has been amazing. ideally with all the problems, whether it is what is happening in london, with the suspension or the dealcense, in process with softbank, he has been a great leader, confident and willing to show humility inappropriate times, and very committed to a thriving culture and thriving company. emily: you mentioned the situation uber is facing in
london, multiple legal probes elsewhere. what approach to hope to see dara take to regulation and the law around the world? arianna: he said himself in a beautiful, open letter to londoners, we need to do better at serving the communities where uber exists around the world. we need to make sure we add value to communities, beyond the value we already add, in terms of mobility and jobs, which is not at all to be underestimated. he wants to be there for the people we serve, starting with drivers. the launch of 180 days of change, starts with allowing tipping for drivers, was intended to rebuild their relationship with drivers. would you say what we saw from the outside on the board is changing, that the board is coming together? arianna: the board is in a good place at the moment.
we have now 11, we have grown. if the softbank deal goes through, the new measures will be put in place, which includes additional independent board members, and independent chair, and all these things that will has world-class a juggernaut the head of the ipo, where we are aiming the four 2019. emily: we understand you became a close confidant of travis as he in the company went through this. what is your relationship with travis like now? arianna: travis is a friend and i am excited to see his own journey. and he has a lot of life ahead of him. i look forward to seeing what he will do. emily: we mentioned harvey there is aarlier, spotlight on sexual harassment, sexual assault, and how men can
flagrantly and horrifically abuse the power. approach sexual harassment in strange ways. how could we put clearer guardrails around what is tolerated, what is not, and what crosses the line? arianna: there are two important issues. -- is to end the talk of the the cult of the top performer. there is a called in silicon valley in hollywood, where, if you are delivering results, if you are delivering great performance, a lot is forgiven you. the other thing that is important, is for us to break the silence. things, andle say they don't say anything. especially if whoever is involved is in a powerful position. we see that in politics, also. i would love to see more republicans is speaking out at the white house. breaking the silence before the few courageous people like the
courageous women you came forward in the harvey weinstein case. it is before it comes to that point. emily: you mentioned politics, you speak about an exclusive -- an inclusive culture while our president seems to be divisive. what are your biggest concerns, nine months into this administration? it was great to see senator mccain last night speaking out. it has been great to see senator corker speaking out. now tohink it is so much republicans, because this is not a partisan issue. it involves the safety of the country. we need republicans as well as democrats -- the republicans we have a lot more, intact, to speak out about what is happening. andy: facebook, google, twitter are having to answer to congress about russian meddling on the platform.
oft is the responsibility these companies when it comes to foreign actors weaponize thing weaponizing the tools they create? toanna: it is very important increase oversight. facebook is hiring additional people and investing more in machine learning, to be able to catch the creation of these fake accounts. whatever you think of free speech, nobody wants to see fake accounts being started. not to interfere in our democracy. but there is another problem we are addressing, which is, in the attention economy. a lot of these companies have the incentive to hijack more and more of our attention. we see that having incredible problems, especially when it comes to teenagers and college students. you saw the article in the new about mental health
problems among teenagers increasing dramatically. emily: you are announcing a partnership this week with the samsung to turn a smartphone into a samsung -- what do you mean by that? arianna: when you are having dinner with your family, when you're sleeping, when you do not want to be interrupted, you will be able to put your phone in what we call thrive mode. that time you will not be about the received text, notifications, calls. you have a vip list if you always need to get a call from a child or spouse, you will be able to do that. but the two -- important elements, i get the message back and will be told when you will be out of thrive mode. and also to give you a mirror of your social media perception.
tell you, you are on instagram for seven hours last week, would you like to reduce the amount you spend on instagram or whatever app? and you decide to say reduce it it can give you a notification and then shut you out. emily: where do you want to take this? arianna: thrive is our work with corporations. we work tompanies, improve the culture, improve outcomes in terms of productivity and well-being. platform,re a media which increases awareness around these issues, both with the latest science and also new models. there are a lot of people who are out practicing and taking care of themselves. they are seeing the impact of this has on their productivity
and performance. ceo,: that was thrive arianna huffington. as -- afteresigned allegations of sexual harassment. albert chang will oversee the studio while they search for price's replacement. there was an estimated budget of $4.5 billion in 2017. price has not responded to our request for comment. up, cisco ceo chuck robbins joins us from laguna beach. here his thoughts on the company's push into software. if you like bloomberg news, check us out on the radio. you can listen on the bloomberg radio app, and on sirius xm. this is bloomberg. ♪ who knew that phones would start doing everything?
see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit or go to xfinitymobile.com. mark: i am mark crumpton in new york, you are watching bloomberg technology. let's begin with a check of first word news. senators averaged a deal to shore up obamacare markets. a tennessee senator and
washington state senator will continue federal subsidies to insurers for two years. >> i have pleased in the hearings of the sessions with over half the senate, chairman alexander and i were able to find common ground on a number of steps to stabilize the market. and to help protect families from premium spikes as a result of the sabotage we have seen from this administration. mark: last week president trump signed an executive order blocking the payment of the subsidies. alexander and murray still need to secure the support of fellow republicans and democrats. president trump's choice has withdrawn his name from consideration. there were reports congressman reno of pennsylvania had pushed legislation making it harder for the drug enforcement agency to fight the opioid crisis. the islamic state self proclaimed capital in syria has fallen. the u.s. backed alliance of syrian forces has liberated the
city. some would say the battle was nearly end. the fight for raqqa again in in june left -- began and left thousands dead. many people will flee the violence and myanmar and cross into bangladesh. this is half a million refugees who are already in overcrowded camps. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ♪ p.m. here after 5:30 in new york. paul allen has a look at the markets. paul: good morning. we have another record close, the s&p pushing higher as well. and crude is just below $52 a barrel, not feeling the love of the markets at the moment. the index has been trading for 30 minutes this wednesday, off 0.25%.
futures are slightly weaker. we have had news from bhp, first ore output is coming in a little less than expected. cover and petroleum output just beat expectations. we may also see a ruling shortly on the court rate fixing by the three big australian banks, anz,nal australian bank, and west bank. the communist party in china congress getting underway. we will have the keynote speaking addressed in a few hours' time. more from bloomberg technology next. ♪ ♪ emily: this is bloomberg technology. i am emily chang. we are talking about cisco.
the name of the game has been transition from legacy hardware to software and services. that bush has been led by my next guest at the digital conference, the cisco ceo chuck robbins. ,ow in your third year as ceo you are talking about building the cities of tomorrow. what does that mean, and how does that affect cisco's bottom line? chuck robbins: great to see you as always. emily: thank you. chuck robbins: what you see all around the world, whether it is a city or country, technology is at the heart. is meeting the objectives cities have around revenue generation or solving problems they have like parking, like lighting costs, etc., all of those now can be sold or achieved through the use of technology. just a quick example, 20% of the lighting cost in the world, 10% of the energy costs come from
lighting. connecting these lights and controlling and affecting -- more effectively, you can reduce spending. there is tremendous opportunity, and the network is at the heart of that. emily: how do you turned that into a business? when does this add to the bottom line? chuck robbins: we are operating in 120 cities around the world. we have digitization agreements with many countries, helping them with health care. all of it continues to to the transition you talked about at the opening of the show. we have innovation going on across all of these areas in helping the cities achieve their objectives. thesea long road with businesses, but we think it will be a great business for a long time. emily: you have been saying cisco will not stick if net in the sand and ignore the changing reality.
how would you rate your progress, making that transition to becoming the company that cisco needs to be? think webins: i never are going fast enough, but i don't think any ceo does. when we started this we had a few objectives we wanted to drive. one was with the deferred software revenue on the balance sheet double from $2.5 billion to $5 billion. we have $10 billion in software today. we also want to move towards more recurring revenue in a percentage of our business here last quarter we had 31%. from theup four points previous year. that is a big move. our product revenue we had over $1 billion of that from recurring revenue which was 40% year-over-year, the first time over one billion for the quarter. so i think we made a lot of progress there. we had massive innovation in the corporate franchise, which is
another key objective. emily: wendell software revenue become the driving force of growth? -- when will software revenue become the driving force of growth? chuck robbins: i think over the next few years, particularly if you look at the launch we did this summer. one of the things we wanted to do was reenergized our core -- reenergize our core franchises. we launched the early phases of intuitive networking which is axtbased networking which is category. you take the priorities of your business and drive them through to how you run your infrastructure as well as drive context out through analytics. we have rewritten our software and have analytics coming out of every aspect of our technology, and we actually lost a subscription business on top of our core switching platforms that people thought we could not do. emily: you have been aggressive
with m&a on a smaller scale. are you open to larger acquisitions? chuck robbins: we are open to any acquisition that lines where we need to go with large, midsize, and i have said that repeatedly. when we think about innovation, we spend a lot of money on internal r&d, and we want to focus that into our core, which we have done. the m&a, we have bought between 15 and 20 company since i begin ceo. driving a lot of deep strategic partnerships like with apple and in spur, rockwell. you will see more and more partnerships. one other interesting aspect we have begun to implement is codevelopment with customers in a very iterative way. we will continue to use all of those depending on what we need. john: chuck robbins -- chambers will be stepping down from the board this year. many of the executives he hired have also left the company. what is that kind of a sea
change mean? what does that signify? chuck robbins: i think this was part of john's plan. he has so many things he is andg, he is into startups want to help drive the start of capacity in the united states. he will do great things. if you look at the leadership team we put in place, we really just need to ensure that we have leadership team that bought in the vision we are going to take the company. i think we have that today and we are executing well. emily: the supreme court decided to hear microsoft's case against the doj with the companies can be forced to hand over information outside of the united states. cisco had backed microsoft and it comes to this case. what is the concern? could this set a precedent? chuck robbins: i don't worry about a precedent. these are policy issues. and what i think, -- we do
support microsoft in this case. and we believe the countries need to define what the policies are. in fact, in this case we believe the countries that are involved actual need to figure out what are the cross-border data, privacy issues, how will we deal with that. the technology can be deployed in whatever way aligns with the policy. we have viewed this as a policy issue. emily: the tech industry have claimed some effort to bridge the gap with washington. valleyrious in silicon that is mostly anti-trump, have you seen the efforts to engage with the administration actually pay off? chuck robbins: i think if you look at the priorities that are coming out of washington from a business perspective, we remain very active. in congress we remain active on tax reform. we remain active on discussions around high skilled immigration,
all things that matter. there is tremendous progress. if you look at the early framework. i think they are making progress. i am happy with the business imperatives they are trying to drive in washington. emily: what are you unhappy with? chuck robbins: my 16-year-old latest grades. there are a lot of things to be unhappy about. it is always a dynamic place, washington. there is a lot of politics, and there is more discussion about things that divide us and things that unify us. things that unify us. this was done across the cows -- the house some of senate, and the executive branch. that is promising. so we are hopeful. emily: chuck robbins of cisco, good to have you. thank you for stopping by.
♪ vte is looking to put a dent in the u.s. smartphone market, and they want to do so by offering a new mobile device that can do something that rivals cannot. take a look. it has been a big year for smartphone announcements, and another company is looking to make a big move in the u.s. market. ae is coming down on full-screen smartphone called the zcem m.
it lets you stream video while ordering food at the same time. >> we think it points to a new era. emily: close some the phone is half an inch thick, not as thin as an iphone. it has a small processor chip a 21xpandable memory in megapixel camera. zte is fourth place in the u.s. smartphone market but has yet to crack the top five worldwide. they have gained market share selling handsets in conjunction with mobile carriers like boost mobile and quicken wireless. but this new one could be exclusively at&t. >> innospec because you know they used to provide a lot of prepay. model with the first high-end markets. emily: the question remains, will this be enough to lower people away from samsung and apple -- lure away from samsung
and apple? joining me now is the ceo of zte chang.devices lishing why take this screen in particular? >> nice to see you, emily. the world is too big for a single screen. since the first iphone was launched 10 years ago, and the consumers' behavior has changed. they are in a new multifunctional world. so we want to bring tomorrow today. foldablethis smartphone which is contrasting with multicast needs for the consumers. the consumers will see it is revolutionary. it is multitasking, multi-functioning. the you think the dual
screen experience is enough to overcome the potential drawbacks like the thickness, like the lack of a second camera? lixin cheng: the key thing is that consumer behavior is already there. only limited by the [indiscernible] [indiscernible] and when we studied getting to thereoof of consumers, really so excited about the future we are delivering. i saw on the video there was a couple of demonstrations already, but i have this on my .ands with bloomberg i think how easy it is. this is a member load. i studied this bloomberg technology, and you see, this is , i can share this with you. can you see it? can you see this? emily: i can picture what you
are showing me, lixin. this strategy is a departure from what made the te successful, prepaid markets, low-cost carriers. why do you think this will succeed in the united states? lixin cheng: because the key thing in our success in the needst below $200 is the of the consumer. we put the consumer at the heart of everything we design and in the delivery. we study the consumer behavior. what is the frustration they have today? is that they are multitasking, they have to switch between apps so often, and the current smartphone model is limiting. the hardware evolution during the last 10 years is great. another very important thing that lt network, it is powering
our world. another, streaming, testing and browsing, shopping and watching the favorite teams together at different games. and you don't want to miss any shot while you share the moment with through step chart, your friends. all of these things are there. this is perfect. then when you fully yet, you will see that there will be traditional smartphone. emily: ok. lixin cheng and ceo with a new approach we will be watching. we hit the road with general motors' present -- president. when gm could see a playoff ridesharing investment. this is bloomberg. ♪
♪ emily: dropbox has introduced a new cloud-based filesharing option for new businesses and a feature for marketing and for creative workers to share products. they are trying to woo more aning customers anticipating ipo this year. the san francisco-based company wants to boost revenue by getting programs to compete with google and microsoft. seat.tion in the drivers the buzz around self driving plans have given shares a boost. shares are up 45% for gm, a recent bullish call it anticipates a $30 billion business coming from gm's self driving and shared car. i sat down with gm's president dan ammann and asked him about the analyst's called. we have everything
integrated under one roof. we have the advanced software engineering keep ability, vehicle manufacturing, and what is allowing us to move as quickly as we are is the capability under one roof which is giving us a steep advantage. that is the way we are proceeding. emily: is that [indiscernible] dan ammann: all of our focus is on moving as fast as we can to get to commercial deployment in the safest way possible. we believe the best way is having the capability under one roof. emily: investors are starting to realize gm's ability to diversify perhaps more than other automakers. these things are still fairly far out into the future. how did they come together for you and when? dan ammann: there is a lot to think about sharing some of the autonomous section. we believe autonomous vehicles can be electronic vehicles. there is an intersection there. it is back to the theme of
having capabilities under one roof that gives us an advantage and how fast we are moving and how we can bring this technology to fruition and get it deployed commercially. emily: you have made a strategic investment in lift. what have you learned? dan ammann: we have had a productive investment relationship with lift. that has given us a perspective into the ridesharing business, and it is really in the very early stages on ridesharing. we have a section of autonomous. we are just at the beginning. there is more to come. emily: googler has had some struggles. you see up -- uber has had some struggles. use the advantage? -- do you see an advantage? dan ammann: that is how the opportunity comes together with ridesharing. 0.1% right now, so we still have more.
we think autonomous technology we will bring to fruition is key to unlocking a lot of the mixed opportunities. emily: what is the likelihood of you buying lift -- lyft outright? dan ammann: we have a lot of ways to go to market through our own network of ability, through different partnerships. there are many options. emily: how do you decide? at what point, now that you have learned all of this make a decision? dan ammann: the closer the technology comes to commercial deployment, then we will think. on,ly: with electricficati what battery cost will make it profitable? dan ammann: what matters is to get the total vehicle profitable. we believe in the all electric future, and we believe in order for that to come to fruition overtime, we need to get the cost of better electric cars down or better than internal
engines. that is the journey we are on, to make sure we have that technical capability. emily: how close are you to breaking even? dan ammann: we have worked to go. emily: i am curious with self driving cars. gm has been able to move faster than a lot of people expected. when you say self driving cars will be on the road in larger numbers in a few years, what do you mean by a few years? give us more details on the timeline. dan ammann: i can't get more specific. things are moving really quickly . we believe we have an interesting approach with having the capability integrated in one place, and that is giving the ability to move it. we feel we have an obligation to bring the technology to commercial deployment as soon as possible because of the significant impact it can make on improving road safety. emily: that was gm president dan ammann. and that does it for this edition of bloomberg technology conference.e wsjd
♪ announcer: from our studios in new york city, this is "charlie rose." charlie: we begin this evening with a press conference today with president trump and mitch mcconnell, soon after their meeting at the white house. we start with the cbs evening news report, and here it is. reporter: now to the other end of pennsylvania avenue, the president told reporters into the rose garden to watch him mende fence. -- mend a fence. donald trump: we are closer than ever before. reporter: after a white house lunch, dona